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League tables Tough competition

Sep 1, 2013

Latin America’s tumultuous history has proved a tricky environment for investment banks. While a handful of global institutions still dominate, local banks are on the rise. By Ben Miller

History is generally a good guide when trying to make sense of the present or predict the future.

Not so with LatinFinance’s quarter century capital markets league tables. Recent years offer a much better indication of overall leaders for the entire 25-year period.

The reason is obvious: rapid expansion of Latin America’s capital markets, and therefore of transaction volume, has taken place in the past decade, so the tables are necessarily heavily weighted towards recent history.

This is especially true of debt capital markets, where low rates and unprecedented global liquidity have in recent years sent investors looking for yield in Latin markets. It also applies to equity capital markets, where the markets have more recently opened up, in spurts, to a wide variety of new issuers.

The volumes in the tables are grouped so that currently existing banks receive credit for deals done by shops they have acquired, or from which they were re-branded. The tables bring together data from Dealogic, which has been keeping score since the early 1990s, as well as the a wealth of information from Securities Data Co and Capital Data, as stored in early editions of LatinFinance.

US shops lead debt

Two US shops top the bond tables for cross-border issuance, thanks to a surge in issuance in recent years.

JPMorgan, and the component banks that contribute to today’s entity, boasts $175 billion from 638 bond deals – nearly 16% of the volume. It leads in most of the highest volume countries: Argentina, Brazil, Chile, Colombia, and Mexico.

Citi comes second, having worked on $120 billion worth of debt issues over the years. Among JPMorgan and Citi’s deals’ tally sit several trades for the largest sovereigns, quasi-sovereigns and blue-chip corporates, topping a billion dollars. Both banks also boast extensive experience on smaller deals, covering an expanding variety of sectors and countries. Deutsche Bank joins in the $100 billion-plus club, with Bank of America Merrill Lynch and Credit Suisse rounding out the top five. Brazil accounts for the most volume in the region, with $357 billion, followed by Mexico with $297 billion. Oil producers have sold the largest single deals. Petrobras’ $11 billion six-tranche offer in May of this year is the region’s largest of the quarter century. It is followed by PDVSA’s $7.5 billion sale in 2007, and Petrobras’ $7 billion jumbo sold in 2012. Mexico’s $6 billion bond sale in 1996 tops the sovereign charts, while América Móvil’s $4 billion deal in 2010 is the region’s pure-corporate champ.

Peaks and troughs

Equity sales have been characterized by fits of heavy deal-making and long silent periods when markets have turned sour. The volatile environment has pushed banks out of the game – and encouraged others in – over the years. Credit Suisse sits at the top of the tables thanks to its consistency and willingness to stick it out in various countries. It claims $49 billion from 208 deals, or close to 13% of the market share over the quarter century.

Demonstrating just how heavily Brazil dominates the market – particularly in recent years – CS is followed by BTG Pactual, with $37 billion and Itaú, with $34 billion. The Swiss bank still leads when only Brazilian deals are included, again followed by Itaú and BTG.

The top three have built up volumes by working on some of the largest deals through the years. These include the $70 billion Petrobras follow-on in 2010 – the region’s largest ever, even if only the roughly $20 billion market-oriented portion is counted – Vale’s $12 billion follow-on in 2008, and Santander Brasil’s $7.5 billion 2009 IPO.

Citi leads bookrunners in Mexico, and Latin America outside Brazil. BTG Pactual – which has recently acquired local house Celfin – leads in Chile.

JPM, Citi also top M&A

JPMorgan also leads the rankings for mergers and acquisitions, with $404 billion in deals involving a LatAm acquirer or target. AB InBev’s $20 billion purchase of the half of Mexico’s Grupo Modelo it did not own in July 2013 pushed JPMorgan ahead of Citi.

Both US shops worked on Cemex’s $16.7 billion acquisition of Rinker, announced in 2006. Citi’s resumé includes its own purchase of Banamex for $12.6 billion in 2001, as well as a $16.8 billion YPF-Repsol tie-up in 1999. JPMorgan also boasts the 2008 BM&F merger with Bovespa in 2008, for $9 billion.

The region’s largest deal was the intra-company maneuver of Telmex into América Móvil in 2010, worth $24 billion. The AB InBev transaction comes in as the largest intercompany deal, surpassing Vale’s 2006 move for Inco at $18.7bn. LF


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